1. Capacity Planning IE 214: Operations Management KAMAL Lecture 5

3. EXERCISES S7.1 – S7.5 Solution: S7.5

5. EXERCISE S7.6 Solution: Expected production = effective capacity * efficiency Design EP = 93,600  0.95 = 88,920 Fabrication EP = 156,000  1.03 = 160,680 Finishing EP = 62,400  1.05 = 65,520

6. EXERCISE S7.7 Solution: Design capacity = 2,000 students Effective capacity = 1,500 students Actual output = 1,450 students

7. EXERCISE S7.8 Solution: Actual or expected output = Effective capacity*Efficiency 5.5 cars  0.880 = 4.84 cars. In one 8-hour day, one bay accommodates (8 hr * 4.84 cars per hr) = 38.72 cars To do 200 cars per day it requires, (200 cars) / (38.72 cars/bay) = 5.17 or 6 bays

9. EXERCISE S7.11 Solution: (a) System process time = bottleneck time = 0.2 hr/unit (b) Bottleneck time = 0.2 hr/unit (c) Process cycle time = 0.05 hr+0.2 hr+0.08333 hr = 0.3333 hr = 20 min (d) Weekly capacity= total time in a week/bottleneck time = (10hr*5days)/0.2 = 250 units/week Stat.1_A 0.05 hr/unit Stat.1_B 0.05 hr/unit Stat.2 0.2 hr/unit Stat.3 0.08333 hr/unit

10. EXERCISE S7.14

11. EXERCISE S7.11 Solution: (a) System process time = bottleneck time = 20 min/unit (b) Hourly capacity = time in an hour/bottleneck time = 60min/20 = 3 units/hr * Process cycle time = 25 min + 15 min = 40 min Station A 15 min/unit Station C 20 min/unit Station B 10 min/unit Station D 15 min/unit

13. EXERCISE S7.22 Given: F = 15,000$ V = 0.01$/ copy P = 0.05$/ copy Solution: (a) BEP$ = [F / 1-(V/P)] = 15000 / 1- (0.01/0.05) = 18,750$ (b) BEPx = [F / P-V] = 15000 / (0.05 – 0.01) = 375,000 copies

14. EXERCISE S7.23 Solution: Profit = (Selling Price – Variable Cost) * Number of Sales – Fixed Cost Profit A = 30000 * (1- 0.5) – 14000 = 1,000 $ Profit B = 50000 / (1 – 0.6) – 20000 = 0 $ Thus, the company should stay as is.

16. EXERCISE S7.26 Given:

17. EXERCISE S7.26 Solution: 1.Find the contribution [1- v/p] for each category 1-(0.75/1.5) = 0.5 2.Find the revenue for each category P*no. sales estimated = 1.5 * 30,000 = 45,000 $ 3.Find the percent of sales (W) W = revenue of category / total revenue = 45,000 / 295,000 = 0.15254237 4.Find the weighted contribution = [1-(V/P)] * W = 0.5*0.1525437 = 0.076271186

18. EXERCISE S7.26 Solution:

19. EXERCISE S7.26 Solution: a) Find the beak-even point in dollar per month using BEP $ = F / ∑ [ (1-(V i /P i )) * W i ] = 7600 $ / month b) BEP $ = 7600 / 30 = 253.3333 $ / day Daily number of meals = (0.338983051*253.3333)/10 = 8.58757 ≈ 9 meals / day

21. EXERCISE S7.28 Solution: Option A: EMV A = (90,000 ×.5) + (25,000 ×.5) = $57,500 Option B: EMV B = (80,000 ×.4) + (70,000 ×.6) = $74,000 Option C: EMV C = 18,000 + 38,500 = $56,500 Option B has the highest EMV.

22. HW S7.13 S7.15